Drugmakers Sue to Stop Medicare's GLOBE Model Before It Reaches the Infusion Chair
PhRMA asked a federal court on Wednesday to vacate the international reference pricing model for Part B drugs. Until a judge rules, the model's timeline for practices that bill for infused and injected drugs still stands.
Idea in Brief
The News
The Pharmaceutical Research and Manufacturers of America filed suit on Oct. 7 in the U.S. District Court for the District of Columbia, asking the court to declare Medicare's GLOBE model unlawful and set it aside.
What PhRMA Argues
The complaint says CMS stretched its authority to test payment models into a nationwide price-setting policy that Congress never authorized, and that the model raises separation-of-powers problems.
Why It Matters
GLOBE targets clinician-administered Part B drugs in oncology, rheumatology, immunology, ophthalmology and endocrinology. The model starts Jan. 1, 2027, with coinsurance changes from April 1, 2027, unless a court intervenes.
A week after Medicare's international reference pricing model for physician-administered drugs became final, the drug industry's largest trade group has gone to court to stop it.
The Pharmaceutical Research and Manufacturers of America filed a complaint on Oct. 7 in the U.S. District Court for the District of Columbia, arguing that the Global Benchmark for Efficient Drug Pricing Model, known as GLOBE, is unlawful and exceeds the authority of the Centers for Medicare and Medicaid Services. The 68-page complaint names HHS Secretary Robert F. Kennedy Jr., CMS Administrator Dr. Mehmet Oz, Center for Medicare and Medicaid Innovation Director Abe Sutton and their agencies as defendants. HHS was not immediately available to comment on the lawsuit, Reuters reported.
"GLOBE is unlawful and clearly exceeds CMS' authority. The policy doesn't make medicines more affordable for most beneficiaries, while putting future medical innovation and patient access at risk," PhRMA president and CEO Stephen J. Ubl said in a statement. He said the group shares the administration's goal of making medicines accessible and affordable, but that CMS cannot rewrite the law and bypass Congress to impose foreign price controls.
What GLOBE does
CMS finalized the model on Sept. 30. The Script Pad explained the final rule on Oct. 4. In short, GLOBE changes how manufacturers' Part B inflation rebates are calculated for certain separately payable drugs and biologics, using prices in a set of economically comparable countries as the benchmark. CMS describes these as medications typically administered by clinicians in health care settings.
The model runs from Jan. 1, 2027, to March 31, 2032, and applies to beneficiaries who live in a randomly selected subset of geographic areas covering approximately 25 percent of people with Original Medicare as their primary coverage. CMS says selected beneficiaries may begin to see reduced out-of-pocket costs beginning April 1, 2027.
The lawsuit does not pause anything on its own. Until a court acts, the GLOBE timeline is the one practices have to plan around.
What PhRMA argues
The core of the complaint is that CMS is using its authority to test new payment models to impose nationwide price setting that Congress never authorized. According to PhRMA, GLOBE fails the statutory requirement to test a model because mandatory manufacturer rebates predetermine the outcome, rewrites Medicare's statutory rebate framework, expands civil monetary penalties beyond CMS's authority, and raises constitutional concerns about the separation of powers and the limits of delegated authority.
The model's legal footing is Section 1115A of the Social Security Act, which created the innovation center. Congress has given CMS "a little bit authority to test models," PhRMA General Counsel Jim Stansel said in an interview with Reuters. "Instead, CMS is doing exactly what Congress has declined to do multiple times over the last several years, and that's to replace the pricing structure in Medicare with a most-favored-nation structure."
The complaint asks the court to declare the rule unlawful, set it aside, postpone its effective date and grant preliminary and permanent injunctive relief, including a temporary restraining order. It states that the rule is scheduled to take effect on Nov. 30, 2026.
PhRMA has challenged most-favored-nation pricing in court before. Reuters noted that the group successfully sued to block an earlier version of most-favored-nation pricing in 2020, a rule that was invalidated on procedural grounds because the administration had issued it without giving the public a chance to comment. GLOBE, by contrast, went through a 60-day public comment period after it was proposed in December 2025, according to the complaint.
Clinical Pearls
- The case is Pharmaceutical Research and Manufacturers of America v. Kennedy, No. 1:26-cv-03498, filed Oct. 7 in federal district court in Washington.
- PhRMA asks the court to vacate the rule, postpone its effective date and grant preliminary and permanent injunctive relief, including a temporary restraining order.
- The complaint says the rule is scheduled to take effect on Nov. 30, 2026, ahead of the model's Jan. 1, 2027, start.
- CMS says the model applies to Original Medicare beneficiaries in randomly selected areas covering about 25 percent of people with Original Medicare as primary coverage.
- Reuters reported that HHS now projects about $440 million in Part B savings over the model period, down from roughly $11.9 billion in the proposed rule.
- No ruling has been issued. Until one is, CMS's published dates are the ones billing offices have to plan around.
A smaller model than first proposed
The GLOBE that PhRMA is challenging is narrower than the one CMS proposed. Reuters reported that CMS plans to waive the participation requirement for manufacturers that have signed separate pricing deals with the White House, and that the model may ultimately apply to as few as four drugmakers. HHS now estimates the program will reduce Medicare Part B spending by about $440 million over the model period, compared with roughly $11.9 billion projected in the proposed rule, according to Reuters.
PhRMA also disputes the patient benefit. The group says just 0.3 percent of Part B beneficiaries would have seen lower out-of-pocket costs under the proposed rule, and fewer under the final version. The complaint argues that most fee-for-service beneficiaries have supplemental coverage that already limits what they pay for their medicines.
Where physicians come in
Physicians are not parties to the case, but they appear in it. The complaint notes that Part B generally pays providers 106 percent of a drug's average sales price, and it cites comments that physician and hospital groups filed on the proposed rule. It says the National Organization of Rheumatology Management raised concern that ripple effects in the market could push average sales prices, and with them provider administration fees, down, and that the American Hospital Association worried GLOBE could raise hospitals' acquisition costs.
The legal question reaches beyond drug pricing, Pharmaceutical Commerce noted. A ruling for CMS would affirm that the agency can use a mandatory pilot to set Medicare drug payment against international benchmarks without new legislation, while a ruling for PhRMA would narrow that path for future models, including GUARD, the administration's companion model for Part D. The complaint itself contrasts GLOBE with innovation center models built around physicians and hospitals, such as the Enhancing Oncology Model and the Ambulatory Specialty Model, which it says change how payments are structured rather than simply lowering them.
What to watch
The next signal is whether PhRMA asks the court for emergency relief before the rule's effective date, and how the government responds. For oncology, rheumatology and ophthalmology practices, nothing changes today. CMS's GLOBE model page remains the reference for which drugs and which areas are in, and the April 1, 2027, coinsurance change is still on the calendar. Billing offices that started preparing after the final rule have no reason yet to stop.
Marcus Bell covers health policy, reimbursement, and regulation for The Script Pad.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
